CIHM 
Microfiche 


({Monographs) 


ICIMH 

Collection  de 
microfiches 
(monographles) 


Canadian  Instituta  for  Historical  Microraproductions  /  Institut  Canadian  da  microraproductions  historiquas 


Tachnical  and  Bibliographic  Notts  /  Notts  techniquas  et  biblioflraphiquM 


The  Institute  has  attempted  to  obtain  the  best  original 
copy  available  for  filmiifa.  Features  of  this  copy  which 
may  be  bibliographically  unique,  which  may  alter  any 
of  the  images  in  the  reproduction,  or  which  may 
significantly  change  the  usual  method  of  filming,  are 
checked  below. 


0  Coloured  covers/ 
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Q  Covers  damaged/ 
Couverture  endommagte 

□  Covers  restored  and/or  laminated/ 
Couverture  restaurie  et/ou  pellicu;  j 


D 


Cover  title  missing/ 

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along  interior  margin/ 

La  reliure  serree  peut  causer  de  I'ombre  ou  de  la 
distorsion  le  long  de  la  marge  interieure 


n 


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II  se  peut  que  certaines  pages  blanches  ajouties 
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L'Institut  a  microfilm^  le  meilleur  exemplaire  qu'il 
lui  a  M  possible  de  se  procurer.   Les  details  de  cet 
exemplaire  qui  sont  peut-4tre  uniques  du  point  de  vue 
bibliographique,  qui  peuvent  modifier  une  image 
reproduite.  ou  qui  peuvent  exiger  une  modification 
dans  la  mithode  normale  de  f ilmage  font  indiqu^ 
ci-dessous. 

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□  Pages  damaged/ 
Pages  endommag^ 

□  Pages  restored  and/or  laminated/ 
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Pages  decolorees,  tacheties  ou  piquees 

□  Pages  detached/ 
Pages  ditachies 

□  Showthrough/ 
Transparence 


□  Quality  of 
Qualite  in« 


n 


print  varies/ 
negate  de  I'impression 


Continuous  pagination/ 
Pagination  continue 


I 1  Cc 


eludes  index(es)/ 
Comprend  un  (des)  index 


Title  on  header  taken  from:/ 
Le  titre  de  Ten-tftte  provient; 


0 


Additional  comments:/ 
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□  Title  page  of  issue/ 
Page  de  titre  de  la  liv 

□  Caption  of  issue/ 
Titre  de  depart  de  la 

D 

Pagination  is  as  follows:  p.  659-675. 


livraison 


Ma.thead/ 

Generique  (periodiques)  de  la  livraison 


This  Item  is  filmed  at  the  reduction  ratio  checked  below/ 

Ce  document  est  filme  au  taux  de  reduction  indique  ci-dessous. 

10X  14X  18X 


22X 


:6x 


30X 


w^     !  n    rr 


12X 


16X 


20X 


24X 


28X 


3:x 


The  copy  filmed  her*  has  been  reproduced  thanks 
to  the  generosity  of: 

Thomas  FIthar  Rara  Book  Library, 
Univartity  of  Toronto  Library 

The  images  appearing  here  are  the  best  quality 
possible  considering  the  condition  and  legibility 
of  the  original  copy  and  in  Iteeping  with  the 
filming  contract  specifications. 


Original  copies  in  printed  paper  covers  are  filmed 
beginning  with  the  front  cover  and  ending  on 
the  last  page  with  a  printed  or  illustrated  impres- 
sion, or  the  back  cover  when  appropriate.  All 
.  other  original  copies  are  filmed  beginning  on  the. 
first  page  with  a  printed  or  illustrated  impres- 
sion, and  ending  on  the  last  page  with  a  printed 
or  illustrated  impression. 


The  last  recorded  frame  on  each  microfiche 
shall  contain  the  symbol  — ♦-  (meaning  "CON- 
TINUED"), or  the  symbol  V  (meaning  "END"), 
whichever  applies. 

Maps,  plates,  charts,  etc..  may  be  filmed  at 
different  reduction  ratios.  Those  too  large  to  be 
entirely  included  in  one  exposure  are  filmed 
beginning  in  the  upper  left  hand  corner,  left  to 
right  and  top  to  bottom,  as  many  frames  as 
required.  The  following  diagrams  illustrate  the 
method: 


L'exemplaire  film*  fut  reproduit  grice  *  la 
g6n6rosit4  de: 

Thomat  Fiihar  Rara  Book  Library, 
Univartity  of  Toronto  Library 

Les  images  suivantes  ont  *X6  reprodultes  avec  It 
plus  grand  soin.  compte  tenu  de  fa  condition  ct 
de  la  netteti  de  l'exemplaire  film*,  at  en 
conformity  avec  les  conditions  du  contrat  de 
filmage. 

Les  exemplaires  origlnaux  dont  la  couvertur*  en 
papier  est  imprimie  sont  filmte  en  comment  ant 
par  le  premier  plat  at  en  terminant  soit  par  la 
dernidre  page  qui  comporte  une  empreinte 
d'impression  ou  d'illustration.  soit  par  le  second 
plat,  seion  le  cas.  Tous  les  autres  exemplaires 
originaux  sont  film6s  en  commenpant  par  la 
premidre  page  qui  comporte  une  empreinte 
d'impression  ou  d'illustration  at  en  terminant  par 
la  derniire  page  qui  comporte  une  telle 
empreinte. 

Un  des  symboles  suivants  apparattra  aur  la 
derni&re  image  de  cheque  microfiche,  selon  le 
cas:  le  symbole  — »►  signifie  "A  SUIVRE",  le 
symbole  V  signifie  "FIN". 

Les  cartes,  planches,  tableaux,  etc.,  peuvent  *tre 
film*s  A  des  taux  de  reduction  dlff*rents. 
Lorsque  le  document  est  trop  grand  pour  *tre 
reproduit  en  un  seul  clichi,  il  est  film*  i  partir 
de  I'angle  supArieur  gauche,  de  gauche  i  droite, 
et  de  haut  en  bas,  en  prenant  le  nombre 
d'images  nicessaire.  Les  diagrammes  euivants 
illustrent  la  mithode. 


1 

2 

3 

1^ 

■  28 

m 

■^H 

itt 

1^ 

1^ 

lU 

■  40 

12.2 
[20 

1.8 


'^1^ 


MICROCOPY  RESOLUTION  TEST  CHART 

NATIONAL  BUREAU  OF  STANDAP5S 

STANDARD  REFERENCE  MATERIAL  1010a 

(ANSI  and  ISO  TEST  CHART  No.  2) 


THE  ECONOMIC  RESULTS  OF  THE  SPECIALIST 
PRODUCTION  AND  MARKETING  OF  WHEAT 


^M 


m 


JAMES  MAYOR 


REPRINTED  FROM  POLITICAL  SCIENCE  QUARTERLY 
Vol.  XXVI,  No.  4 


NEW  YORK 

PUBLISHED  BY  GINN  &  COMPANY 

1911 


THE  ECONOMIC  RESULTS  OF  THE  SPECIALIST 
PRODUCTION  AND  MARKETING  OF  WHEAT 


UY 


JAMES  MAYOR 


REPRINTED  FROM  POLITICAL  SCIENCE  QUAi     ERl.Y 
Vol..  XXVI,  No.  4 


NEW  YORK 

PUBLISHED  BY  GINN  &  COMPANY 

1911 


THK  ECONOMIC   RKSULTS  OF  THE  SPECIALIST 
PRODUCTION  AND  MARKETING  OF  WHEAT 

THE  increase  of  |H>pulatiun  in  western  Europe,  especially 
in  Great  Britain  and  Germany ,  during  the  past  tifty 
years  and  the  contemporaneous  advance  in  the  general 
standard  of  comfort  have  led  to  an  increased  consumption  of 
wheat,  absolutely  and  per  capita.  The  increased  consumption 
of  wheat  lias  promoted,  and  it  has  been  promoted  by,  the  en- 
largement of  the  area  devoted  to  wheat  production.  The  list 
of  countries  exporting'  wheat  to  western  F^iirope  has  now  be- 
come a  long  one  mi  tlie  <  »(eci  A  wheat  importation  into 
E!u rope  has  been  >  inciean^  ilu  a'  igtion  of  agricultural  cap- 
ital to  wheat  production  in  these  ntries  and  to  check  it  in 
Europe.  Although  the  yield  p'  r  .u  -e  of  wheat  in  England  and 
in  Germany  is  vcrv*  much  greater    ''=?  the  yic  Ui  m  other  coun- 


v^liert,  which  do  not 
general  kept  the  price 
teased  demand  for  it, 
in  western  Euroj-e  un- 
to  be  making  either 
Km  >;h\  which  would 
'   c<  ,.     )rt.  c    .  alter- 
vhrai,  «hitl.  would 
■i«iu<iiri,t!   read- 


tries,  the  growth  of  'vhcat  upon 
need  or  do  not  receive  enrichmcn 
of  wheat  down,  in  spite  of  the  va.s 
and   has   thus    rendered  wluat  farn 
profitable.     Two  factors,  liowt  vt  i     - 
for  a  check  in  the  increase  of  demai  t. 
mean  a  change  of  diet  or  a  dimin'  tic 
natively,  for  further  advances  in  the  prici 
probably  be  accompanied   by  commerria 
justments  and  crises. 

(  1 )  The  first  of  these  factors  is  the  incre.,  n  in 

the  wheat-producing  areas  themselves.     Thisi      ■  <  ial 

importanre  in  the  United  States  and  in  Canad  .     >  ht  ..p- 

I'lation  has  been  increasing  rapidly;   and  it  n^     I,      •  »or- 

tance  in  Russia,  if  in  that  country  there  car       ;(  a  hi^rhrr 

standard  of  comfort  among  the  peasantry        ihe   4<ivernin«  i. 
changed  its  railwa\'  policy  with  regard  to  wh_  ,i  ?     mrts. 

(2)  The  second  factor  is  the  limitation  imj^Hj-ncd  uj..m  proiiuc- 
tion  (a)  by  the  limitation  of  the  area,  no  mater  how  larf^e  it  may 
be  assumed  to  be,  which  can  be  devoted  to  wheat  cultivation ; 

659 


5r^  POLITICAL  SCIkSii:  QVAHThHLY  [Vol.  XXVI 

(/!>)  by  the  progressive  exhaustion  of  the  areas  devoted  to  the 
cultivation  of  wheat;  and  (r)  by  the  possible  diversion  of  agri- 
cultural capital  and  labor  from  the  pro.luctio:  of  wheat  to  the 
})roduction  of  other  cr^  !>». 

Both  ot  these  factors  make  for  a  situation  in  which,  the 
precise  period  being  matter  of  speculation,  the  Wc^t-European 
farmer  may  once  more  find  wheat  a  profitable  crop,  although 
the  profit  t..  be  derived  from  this  as  compared  with  other 
crops  would  determine  to  what  extent  it  might  be  advantageous 

to  cultivate  it. 

As  a  countervailing  factor  it  is  necessary-  to  take  into  account 
a  probable,  and  possibly  considerable,  increase  in  the  prou. 
tivity  ot  the  wheat  areas.  As  the  price  of  wheal  advances, 
there  will  be  an  increasing  tendency  to  divert  to  wheat  culti- 
vation lands  which  are  now  used  for  other  purposes  and  to  en- 
rich lands  now  uninttnsively  cultivated. 

Meanwhile  the  enormous  European  demand  tor  wL.al  and 
the  relatively  high  price  which  at  present  is  secured  for  it.  have 
resulted  in  the  specialist  growth  of  wheat,  the  chief  incidents 
of  which  it  is  the  purpose  of  this  paper  to  describe. 

I 

The  development  of  wheat  production  to  meet  the  almost 
continuous  increase  of  demand  has  involved  the  application  of 
a  great  mass  of  agricultural,  industrial  and  commercial  capital 
to  the  production,  storage,  tra.isportation  and  distribution  of 
whe:^^  So  vast  is  this  mass  of  capital  that  it  is  almost  impos- 
sible to  form  even  an  approximate  estimate  of  its  amount. 
The  utmost  that  can  be  done   is  to  analyze  it  into  its  various 

elements. 

( I  )  ^ '  hough  the  whole  capital  invested  in  railway  construc- 
tion and  equipment  within  the  areas  in  which  wheat  is  the  pre- 
dominant crop  cannot  be  charged  (so  to  say)  against  wheat, 
yet  there  can  be  no  doubt  that  a  very  large  part  of  it  must  be 
so  charged.  Main  lines  and  branches  have  been  and  are  being 
constructed  in  the  United  States  and  .r.  Canada,  primarily  with 
the  view  of  bringing  out  the  wheat  crop.  Thus  at  least  a  large 
part  of  railway  construction  and  equipment,  not  mere  ly  within 


y... 


PXOnt  1/  IO\  .l\/>  MAtKtTINti  "I-   n  III-  it 


&n 


\u  /hcat-prodiicing  area  but  bctwern  that  area  and  th  sea- 
board, must  be  reijarded  as  having  been  broii^»IU  into  existence 
for  the  sake  of  the  cx[)ortation  of  wlieat. 

(2)  Similarly  at  least  a  portion  of  the  costs  of  canalization, 
dock  accommodation  ant!  shippinj;.  with  the  eontinj^rnt  costs  of 
lighting,  buoying  ami  improving  the  navigation  of  inland  waters 
and  estuaries,  must  be  charged  au'ainst  the  movement  of  \vhe.it 
to  the  seaboard  ;  and  a  portion  of  the  co.sts  of  ocean  navigation 
must  be  similarly  debited  to  wheat  exportation. 

(3)  The  provision  of  elevators,  grain  warehouses  </<  at  local 
stations  within  the  whe.it  area  and  at  shipping  and  receiving 
ports  must  be  simih.  .y  charged  against  the  wheat  trade. 

These  three  large  items  may  be  regarded  as  representing  the 
mass  of  industrial  capital  devoted  to  the  collection,  transporta- 
tion and  distribution  of  wheat;  but  thi-  enumeration  of  the  dif- 
ferent forms  of  capital  employed  in  th<  total  process  is  not  yet 
exhausted. 

The  primary  form  is  of  course  the  agricultural  capital  ex- 
pended by  the  farmer  in  preparing  the  land,  in  .seeding  and  in 
harvesting,  as  well  as  the  capital  invested  in  agric  nral  in-  -•- 
ments  and  in  animals  for  the  conduct  of  farming  opemtions. 
In  an  isolated  region,  where  agriculture  is  carried  on  by  primi- 
tive methods  under  a  system  of  natural  economy,  agricultural 
capital  slowly  accu-  'ulated  in  seed  and  in  animals  i.-.  the  only 
capital  employed ;  jut  when  production  for  sale  is  undertaken, 
and  particularly  when  specialist  production  has  practically  ex- 
tinguished natural  economy,  the  reinforcement  of  agricultural 
capital  by  commercial  capital  comes  in  practice  to  be  a  necessity. 

The  amount  of  agricultural  capital  required  by  a  whv^at 
farmer  in  the  Ca.iadian  Northwest  is  very  small.  A  farmer 
may  take  i6o  acres  on  homestead  terms  by  means  of  a  pre- 
liminary payment  of  $io.  He  may  arrange  with  another 
farmer  or  with  a  ploughing  contractor  to  plough  his  land  for 
him.  The  payment  exacted  for  this  service  will  depend  upon 
the  acreage  to  be  brought  under  cultivation.  For  $200,  or 
thereabouts,  he  can  have  30  acres  of  new  land  broken  and 
sown.-  When  the  harvest  time  comes,  he  may  again  contract 
for  harvesting  and  threshing,  which  will  cost  him  about  $120 


^^2  POUTJCA*.  SClkNCE  QUAHTERLY  [Vol.  XXVI 

more.     When  Ihe  crop  is  threshed,  he  may  obtain  payment  for 
it  from  the  elevator  in  time  to  pay  his  contractor  for  the  har- 
vesting and  threshing.     He  may  thus  manage  to  get  his  crop 
in  and  out  for  an  advance,  on  his  own  part,  of  little  more  than 
$200.     Or  he  may  buy  a  plough,  seed  and  harvesting  imple- 
ments on  credit,  devoting  his  own  capital  exclusively  to  the 
maintenance  of  himself  and  his  family  while  the  crop  is  grow- 
ing.    In  this  case  the  entire  agricultural  capital,  properly  so 
called,  actually  employed  in  field  operations,  will  be  supplied 
by  others,  while  all  the  labor  will  be  supplied  by  himself.     If, 
as  indicated  above,  the  case  of  a  new  settler  is  taken,  a  house 
will  have  to  be  built ;  but  the  cost  of  a  dwelling  is  not  strictly 
chargeable  as  agricultural  capital,  and  in  any  case  it  is  too 
variable  to  be  taken  into  account.     The  cost  of  a  second  year's 
cultivation  by  a  settler  will  be  much  less  than  that  of  the  first 
year;   it  may  indeed  be  only  one-half  as  much. 

The  great  bulk  of  the  agricultural  capital  employed  in  the 
Canadian  Northwest  is  in  fact  supplied  by  railway  companies, 
loan  companies,  banks,  implement  companies  and  general 
dealers.  It  is  only  in  this  way  that  farmers  having  little  or  no 
agricultural  capital  at  the  outset  »^ave  been  able  to  establish 
themselves.  Moreover,  the  natural  fertility  of  the  unexhausted 
soil  is  so  great  that  a  very  small  amount  of  capital  is  required 
per  acre.  It  has  consequently  been  possible  to  bring  a  vast 
area  under  cultivation  by  means  of  a  relatively  small  amount  of 
agricultural  capital. 

If  industrial  and  agricultural  capital  alone  were  employed  in 
the  process  described,  the  return  of  these  capitals  would  be 
relatively  slow.  The  farmer,  the  elevator  company,  the  railway 
company  and  the  steamship  company  would  be  compelled  to 
wait  until  the  wheat  reached  not  only  the  miller  but  the  con- 
sumer, were  it  not  for  the  organization  of  commercial  capital, 
which  forms  the  connecting  link  between  the  successive  stages. 
Commercial  capital  enables  the  farmer  to  obtain  payment  in 
cash  for  his  wheat  as  soon  as  it  is  harvested.  Commercial 
capital  brings  the  wheat  to  the  elevator  and  defrays  the  cost  of 
storage.  It  pays  all  transportation  charges  until  the  wheat  or 
flour  is  finally  delivered  to  the  distant  consumer.     In  this  way 


No.  4] 


PRODUCrUKS   AM)  MAKKEIING  Ol-    WHEAT 


663 


commercial  capital  greatly  increases  the  velocity  of  re^irn,  not 
alone  of  agricultural  capital,  but  of  the  industrial  c  ^.lal  invested 
in  the  means  of  transportation.  This  increase  in  velocitj-  of 
return  implies  increased  efficiency ;  indeed  it  renders  the  round 
of  cooperative  activities  possible.  Without  it,  specialist  pro- 
duction for  sale  at  distant  places,  above  all  production  for 
export,  could  not  be  effected  on  a  scale  of  any  magnitude. 
Not  only  does  this  application  of  commercial  capital  enable  the 
farmer  to  sell  his  wheat  for  cash,  it  also  enables  him,  if  he 
wishes  to  do  so,  to  borrow  upon  the  security  of  his  wheat  and 
to  keep  it  for  an  advance  in  price.  This  anticipated  advance 
does  not  always  occur;  but  in  any  case  the  farmer  is  not 
obliged,  through  the  absence  of  such  faciliiies,  to  sell  his  wheat 
at  once  for  what  it  will  fetch.  Moreover,  Jie  extensive  organi- 
zation of  credit  in  the  western  United  States  and  in  northwest- 
ern Canada  and  the  competition  of  the  numerous  banks  and 
financial  companies  enable  the  farmer  to  borrow  at  a  rate  of 
interest  which  cannot,  as  a  rule,  be  regarded  as  exploitative. 

The  mechanism  by  means  of  which  agricullural  capital  is 
raised  by  the  farmer  on  the  security  of  his  land  is  provided  by 
loan  companies  established  for  the  purpose.  These  companies 
are  so  numerous  that  the  business  is  competitive  and  the  rates 
of  interest  are  relatively  low.  The  land  itself  is  conveyed  to 
the  settler  either  on  homestead  terms  or  on  credit  on  the  instal- 
ment plan,  and  his  house  is  usually  an  inexpensive  structure,  so 
that  nearly  the  whole  of  his  liquid  personal  capital  may  be 
regarded  as  available  as  agricultural  capital.  Additional  capital 
may  sometimes  be  obtained  by  the  farmer,  either  through  credit 
extended  by  the  agricultural  implement  makers  or  by  means  of 
the  discount  of  the  farmer's  notes  by  them  or  by  a  bank. 

The  elevator  companies  that  purchase  the  grain  from  the 
farmer  and  organize  its  transportation  to  the  seaboard,  and  the 
merchants  who  organize  its  exportation,  while  having  a  certain 
amount  of  their  own  capital  involved  in  their  respective  opera- 
tions, draw  upon  the  banks  for  most  of  their  enormous  require- 
ments, thus  interposing  their  credit  while  the  capital  is  really 
furnished  by  the  banks.  Every  year  large  amounts  are  with- 
drawn from  their  liquid  funds  by  the  banks  in  the  United  States 


664 


I'UUTICAI  SCIE\CE  QVAtirEKLY 


[Vol.  XXVI 


and  in  Canada  and  are  devoted  temporarily  to  the  various  opera- 
tions which  have  been  described  and  which  are  known  collect- 
ively as  "  the  movement  of  crops."  Until  a  few  years  ago,  a 
large  amount  of  Canadian  capital  was  employed  in  this  way  by 
the  banks,  in  financing  crop  movements  in  the  United  States. 
At  present,  not  only  is  a  comparatively  small  amount  of  Cana- 
dian capital  used  in  this  way  outside  of  Canada,  but  bankers  in 
the  United  States  lend  large  sums  to  elevator  companies  for  the 
movement  of  the  crops  in  Canada.  As  the  population  of  the 
United  States  increases  and  the  surplus  of  wheat  for  export 
from  that  country  diminishes,  there  will  doubtless  be  further 
competition  of  American  with  Canadian  capital  in  the  crop- 
moving  operations  in  the  more  northerly  country. 

Thus  the  development  of  the  universal  wheat  market  and  the 
internal  commercialization  of  the  financial  and  industrial  opera- 
tions which  constitute  crop  movement  have  enormously  in- 
creased the  efficiency  of  agricultural  capital  and  have  enabled 
the  farmer  to  conduct  his  business  on  a  scale  which,  without 
these  agencies,  would  be  impossible.  This  gigantic  mechanism 
has  been  built  up  gradually.  Upon  the  smooth  interaction  of 
its  intricate  parts  depends  the  '*  living  "  of  the  American  and 
Canadian  farmer  and  of  the  European  consumer  alike. 

It  is  true,  in  a  sense,  that  under  this  system  the  farmer  works 
for  the  broker ;  and  the  farmer  is  no  doubt  sometimes  under  the 
impression  that  the  whole  of  the  difference  between  what  the 
consumer  pays  and  what  he  himself  receives  is  so  much  taken 
out  of  his  pocket  by  a  ;j;roup  of  remorseless  capitalists,  whose 
mere  possession  of  money  enables  them  to  exploit  the  frugal 
but  necessitous  riiltivator.  While  occasionally  the  state  of  the 
market  ma>'  hi-  such  as  to  give  at  least  an  apparent  advantage 
to  the  commercial  capitalist,  whose  representative  for  the 
farmer  is  the  elevator  company  to  which  he  sells  his  wheat,  this 
is  not  always  the  case,  and  in  general  the  competition  is  so  great 
that  excessive  commercial  profits  are  very  unusual.  The  Cana- 
dian farmer,  wlio  enjoys  very  great  political  influence,  has  been 
able,  through  the  Grain  Acts,'  to  protect  himself  against  any 


'  Ksperially  6?  and  64  Victoria,  rh.  30.  <ec.  ^%. 


No,  4J  PROOUCnON  ASD  MAKKh.Tim:  OF  WHEAT  665 

overt  forms  of  exploitation  by  the  yrain  companies ;  but  here 
as  elsewhere  the  most  effective  check  upon  unfair  charges  is 
of  course  to  be  found  in  competition.     The  collection,  trans- 
portation and  distribution  of  wheat  have  come  to  be  conducted 
on  so  vast  a  scale,  demanding  the  industry  of  so  immense  an 
army  of  persons  and  employing  so  large  a  capital,  that  monop- 
olization has  in   effect  become  impossible.     The  circumstance 
that  a  great  mass  of  capital   is   required   at  a  certain  time  for 
only   temporary  use   renders  the  application   of  monopolistic 
methods  more  difficult  than  in  other  branches  of  business.    En- 
grossing of  wheat  is  indeed  occasionally  attempted  upon  a  cer- 
tain scale;  and  at  moments  when,  owing  to  deficiency  of  crops 
or  other  cause,  there  is  a  relatively  sle.ider  surplus  of  wheat, 
'  and   still  more  when  there  is  a  real  shortage,  the  first  persons 
who  apprehend  the  situation  are  not  unlikely  to  benefit.     The 
prospect  of  certain  though   relatively  small  seasonal  gains  has, 
however,    undoubtedly   been    a    more    important    influence    in 
drawing  into  the  wheat  trade  an  amount  large  enough  to  con- 
duct it  upon  its  present  scale  than  the  prospect  of  large  adven- 
titious gains. 

It  should  be  noted  that  both  farmers  and  millers  may,  and 
that  very  many  of  them  do,  speculate  in  their  own  or  in  other 
wheat.  The  farmer  who  stores  his  surplus  grain  instead  of  sell- 
ing it  speculates  in  it.  The  farmer  who  sells  all  his  grain  with- 
out retaining  sufficient  for  seed  speculates  in  it.  The  farmer 
who  sells  his  grain  in  the  face  of  an  advancing  market  and  buys 
grain  for  future  delivery  speculates  in  it.  The  miller  who,  after 
he  has  bought  grain  sufficient  for  his  flour-milling  require- 
ments, sells  grain  for  future  delivery  in  order  to  protect  himself 
against  a  falling  price,  so  that  should  he  lose  upon  flour  he 
could  recoup  himself  upon  wheat,  also  speculates  in  wheat. 

The  fact  that  wheat  is  at  any  moment  convertible  into  cash, 
its  highly  liquid  character  as  a  security,  its  great  mobility  and 
the  rapidity  of  its  movement  depend  primarily  upon  the  univer- 
sality of  its  market  and  in  second  instance  upon  the  efficiency 
of  the  mechanism  of  its  exchange.  Speculation  is  probably 
quite  inseparable  rom  these  conditions.  If  the  speculative 
element  were  wholly  eliminated  from  the  wheat  market,  some 


666 


POLITICAL  SCIENCE  QUARTERLY 


[Vol.  XXVI 


of  the  mobility  which  characterizes  the  system  would  inevitably 
be  sacrificed. 

The  two  factors  that  determine  the  price  o*  wht  it  on  the 
supply  side  are  the  crop,  quantity  and  quality  jeing  taken  into 
account,  and  the  reserves  from  previous  years.  These  together 
make  up  the  total  visible  supply  when  the  harvest  of  a  new 
year  is  reaped.  And,  considering  each  year  by  itself,  price;,  are 
relatively  at  their  lowe.st  point  at  the  moment  of  harvesting, 
unless  some  climatic  cataclysm  suddenly  affects  the  crop ;  and 
prices  are  relatively  highest  in  the  spring,  \vhen  the  demand  for 
grain  for  seed  and  for  consumption  appear  as  concurrent 
phenomena. 

Immediately  after  harvest,  the  alternative  presented  to  the 
farmer  and  the  contingencies  which  he  must  consider  in  solving 
his  all-important  problem  may  oe  stated  as  follows : 

( 1 )  If  he  sells  his  wheat  at  once  to  the  elevator,  he  obtains 
immediate  cash,  a  portion  or  all  of  which  he  needs  to  replace 
his  impaired  or  exhausted  agricultural  capital  oi  to  repay  ad- 
vances of  such  capital." 

(2)  If  he  sells  his  wheat  at  once,  he  avoids  the  necessity  of 
storing  it.  If  he  has  a  large  barn  he  may  regard  this  as  an 
unimportant  element;  but,  if  he  has  a  small  barn  or  none  at  all, 
the  cost  of  storage  has  to  be  considered.  If  he  needs  cash,  he 
may  store  his  grain  and  borrow  upon  it ;  but  in  that  case  the 
interest  upon  the  loan  must  be  taken  into  account  in  additioa 
to  the  cost  of  storage. 

(3)  If  he  sells  his  whe^t  at  once,  he  will  under  normal  cir- 
cumstances have  to  accept  a  lower  price  than  he  will  receive 
later  if  he  holds  it  and  if  the  price  pursues  its  custo-nary 
fluctuations. 

(4)  If  he  holds  his  wheat,  he  takes  the  risk  that  the  usual 
advance  of  the  price  in  spring  may  not  occur.  Since  the  price 
is  not.  determined  -  xclusively  by  the  supply  of  wheat  in  those 
c<^  .itries  in  which  the  crop  is  reaped  in  precisely  the  same 

'  The  elevator  companies  usually  strre  wheat  >  thirty  days  free  of  charge,  so  that 
the  farmer  has  this  period  wherein  to  make  up  nis  mind  what  to  do.  The  farmer 
whose  operations  are  conducted  on  any  conside;aMe  scale,  watches  closely  the  move- 
ments of  wheat-prices,  sor—'.imes  having  them  telegraphed  to  him. 


1 


1 

4 


No.  4] 


PRODUCTION  ANP  MARKETING  OF  WHEAT 


667 


1 


season  of  the  year,  and  since  the  price  is  influenced  by  many 
factors  other  than  those  that  operate  on  the  side  of  supply,  his 
calculations,  however  astute,  may  be  upset,  and  he  may  secure 
no  higher  price  than  he  would  have  obtained  by  an  immediate 
sale 

(5)  The  sp«.cial  conditions  of  the  grain  trade  in  the  Canadian 
Nor;nwest  involve  further  considerations.  In  order  to  procure 
rapid  delivery  of  wheat  for  export,  so  that  in  transporting  the 
crop  full  advanta'  °  may  be  taken  of  the  relatively  cheap  water 
transit  through  the  Great  Lakes,  the  price  of  wheat  is  suddenly 
lowered  towards  the  end  of  the  season  of  water  transportation, 
that  is,  in  November.  This  drop  in  price  is  intended  to  offset 
the  cost  of  storing  the  wheat  at  the  ports  or  at  interior  points 
until  the  openin  of  the  next  season  of  navigation,  or  to  make 
up  the  difference  between  the  cost  of  moving  the  wheat  wholly 
by  rail  and  that  of  moving  the  wheat  partly  by  water  to  the 
ocean  port.  The  farmer  must  therefore  consider  the  facts  that 
in  September  he  can  get  so  much  for  his  wheat,  certa'nly;  in 
November  so  much  less,  probably;  and  in  May  probably  so 
much  more,  any  profit  realized  in  May  being  diminished  by  the 
cost  olding  the  grain  throughout  the  vvinter.     November 

and  \.-j  sales  are  problematical  as  re^^rds  return.  Neverthe- 
less. <-onsiderable  quanvities  of  wheat  in  excess  of  those  required 
for  seed  are  customarily  held  over  the  winter  by  the  Canadian 
farmers,  either  in  the  elevators  or  in  their  owr>  barns.  The 
mills  in  Winnipeg  and  the  local  mills  are  of  course  purchasers 
throughout  the  winter,  unless  they  have  fully  stocked  them- 
selves before  the  winter  sets  in. 

(6)  A  further  co.isid'^ration  that  influences  sales  of  wheat  is 
associated  with  th.o  determination  of  quality.  As  a  matter  of 
experience  the  farmer  is  seldom  satisfied  with  the  grading  of  his 
wheat  at  the  elevator.  He  customarily  regards  his  grain  as 
being  all  of  "  number  cne"  quality.  If  it  seems  probable  that 
it  will  not  be  so  graded,  he  may  decide  to  use  it  for  feeding 
purposes  for  his  animals,  if  he  has  any,  rather  than  sell  it  for 
what  he  regards  as  too  low  a  price. 

Having  considered  the  nature  ( f  the  mechanism,  we  may  now 
turn  to  the  more  important  econom  ^.  results  of  its  operation. 


668 


UTICAl.  SLlENih   QIARTERLY  [Vol..  XXVI 


II 

The  chief  economic  results  of  the  devc.opment  of  specialist 
wheat  production  may  be  set  forth  as  follows. 

Railways  have   been  built  in   advance    of   population    into 
regions  known  or   supposed  to  be  possible  wheat-producing 
areas.     In  such  railway  enterprises,  even  when  population  fol- 
lows the  railway  and  wheat  production  results,  the  traffic  must 
for  a  long  time  be  a  one-way  traffic,  and  the  freight  upon  wheat 
must  contribute  at  least  a  large  percentage  of  the  revenue  of  the 
line.     This  question  of  one-way  traffic  during  the  wheat-export- 
ing season  is  a  very  serious  one  for  the  railway  companies. 
Every  year  enormous  numbers  of  cars  must  be  concentrated  in 
the  West  to  meet  the  demands  of  the  wheat  traffic,  and  ir.any 
of  these  must  be  sent  empty.     The  regulation  of  railway  rates 
and  the  sharpness  with  which  discriminations  are  watched  and 
punished   in  the  United  States  and  in  Canada  render  il  difficult 
for  the  railways  to  make  concessions  in  order  to  secure  traffic 
by  inducing  traders  to  anticipate  their  requirements ;   and  the 
variability  of  the  seasons  renders  it  difficult  to  estimate,  within 
a  week  or  ten  days,  the  date  at  which  the  cars  will  begin  to  be 

required. 

The  reason  why  the  grain  trade  is  so  strictly  a  seasonal  trade 
is  that  the  most  economical  means  of  transport  is  partly  by  rail 
and  partly  by  water.     The   freezing-up  of  the  lake  ports  early 
in  December  and   the  closing  of  lake  navigation   places  a  limit 
upon  the  duration  of  the  season.     After  the  lake  ports  are 
closed,  the  grain   can   be  carried  to  the  seaboard   only  at  an 
additional  expense.     Thus  the  season  is  a  short  one.     Beginning 
in  the  first  days  of  September,  it  practically  ends,  for  the  farmer, 
early  in  Nov'ember ;   because  a   month  before  the  actual  close 
of  navigation  the  elevator  companies  cease  to  buy  for  shipment 
in  order  to  allow  time  for  transportation  to  the  ports  and  loading. 
The  increased  production  of  wheat  in  new  areas  induces  the 
provision  of  facilities  other  than  those  offered  by  the  railways, 
viz.  elevators,  docks,  steamships  etc.     Industrial  and  commercial 
capital    is    drawn    into    these    enterprises    also.     The   seasonal 
character  of  the  grain   trade  exercises   an  important  influence 
upon  the  movement  of  capital.     There  is,  for  example,  at  the 


Ni..4]  PkODlCnO.S  A.\D  MAKKhllNC  OF  WHEAT 


669 


i 
I 


season  of  the  movement  of  crops,  a  steady  stream  of  commercial 
capiUl  in  the  form  of  cash  and  credits  from  New  York,  Mon- 
treal and  Toronto  to  the  West,  especially  to  Chicago  and 
Winnipeg.  This  stream  of  funds  has  its  source  in  European 
credits  which  begin  to  be  created  as  soon  as  shipment  of  the 
crop  begins.  Regularly,  although  not  quite  invariably,  exchange 
rises  so  high,  in  consequence  of  the  creation  of  so  great  a 
mass  of  "  one-wa>' "  credits,  that  gold  is  shipped  from  Europe 
in  the  "  autumnal  drain."  It  goes  without  saying  that  New 
York  provides  exchange  for  both  the  United  States  and  Canada. 
The  reactions  upon  the  money  markets  of  both  continents  need 
not  be  pursued  in  the  present  study. 

The  entrance  of  the  new  wheat  into  the  universal  market,  un- 
less it  merely  suffices  to  satisfy  the  increased  demand  due  to  the 
increase  of  population  and  the  rising  standard  of  comfort,  must, 
other  things  being  equal,  contribute  to  the  fall  of  price.  This 
fall  of  price  must  in  succeeding  years  tend  to  drive  out  of  the 
market  those  producers  who  are  unable  to  offer  their  wheat  at 
the  market  price  without  loss.  The  value  of  the  wheat  lands  of 
such  producers  must  fall  as  wheat  lands  and  they  must  be 
abandoned  or  devoted  to  other  uses.' 

On  the  other  hand,  so  lon^  as  the  demand  increases  in  pro- 
portion to  or  in  excess  of  production,  and  the  price  is  main- 
tained or  rises,  the  inducement  to  engage  in  specialist  production 
of  wheat,  even  on  land  relatively  less  suited  to  such  production, 
is  invincible.  The  farmer  will  usually  cultivate  the  crop  which 
is  most  immediately  profitable.  The  value  of  land  so  situated 
that  it  can  be  used  for  the  production  of  th-j  profitable  crop  will 
tend  to  advance  uiore  or  less  rapidly.  It  will  tend  to  increase 
sharply  when  transportatio;-  facilities  first  bring  it  within  reach 
of  the  market,  and  it  will  tend  to  advance  still  further  with  the 

'  Thus  the  opening  up  of  the  wheat  areas  in  the  United  States  caused  a  fall  in  the 
value  of  agricultural  land  in  England,  and  the  opening  up  of  '.le  Northwest  of  Canada 
caused  a  fall  in  the  value  of  agricultural  land  in  Ontarir.  Even  in  Manitoba  the 
value  of  farm  lands  has  been  affected  by  the  development  of  Alberta  tnd  Saskatch- 
ewan There  can  lie  no  doubt  that  advance  of  the  price  of  land  in  the  United  .Slates, 
particularly  in  the  Middle  West,  has  been  checked  by  the  migration  of  Ameri-an 
farmers  to  Canada. 


670 


POLITICAL  SCIENCE  QUARTEIiLY  [Vol.  XXVI 


development  of  contingent  facilities  until  these  are  fully  pro- 
vided, after  which  it  will  tend  to  remain  stationary. 

The  richer  new  lands,  upon  which  wheat  may  be  grown  with 
a  relatively  small  amount  of  labor  and  of  agricultural  capital, 
enjoy,  so  'ong  as  these  conditions  continue,  an  advantage.     This 
advantage  is  further  secured  by  the  development  of  a  financial 
mechanism  which  increases  the  velocity  of  the  return  of  such 
aKriciltural  capital  as  is  employed  and  thereby  increases  its 
economic  efficiency.     The  establishment  of  this  mechanism  for 
the  marketing  of  wheat  and  the  absence  of  any  equally  efficient 
arrangements  for  the  marketing  of  other  agricultural  products, 
for  which  the  demand  is  not  so  great  or  so  universal,  induces 
specialist  production  of  wheat.     This  specialist  production  may 
be  and  often   is  carried  so  far  that  the  wheat  producer  pro- 
duces nothing  else." 

At  the  present  time  the  specialist  wheat  farmer  finds  that  by 
cultivating  his  land  to  the  fullest  extent  he  may  in  many  cases 
obtain  so  high  a  return  as  entirely  to  recoup  the  cost  of  his  land 
by  the  sale  of  two  or  three  crops.     Although  the  land  is  ex- 
hausted by  this  successive  cropping,  and  its  productive  value 
seriously  diminished,  the  farmer  finds  himself  in  possession  of 
from    160  to  640  acres  of  land  which  have  rost  him  almost 
nothing,  in  a  country  in  which  the  price  of  lai.  J  is  rising  rap- 
idly.    The  successful  practice  of  such  "  mining."  as  it  has  come 
to  be  cal    d,  is  one  of  the  elements  to  be  taken  into  serious  ac- 
count in  estimates  of  the  future.     So  long  as  it  is  possible  for 
the  farmer  to  make  a  considerable  sum  of  money  in  a  few  years 
and  then  to  sell  the  partially  exhausted  land  at  a  good  price, 
recommendations   of    summer   fallowing   have   little    practical 
effect.     In  spite  of  the  obvious  and  proved  advantages  of  this 
system,  summer  fallowing,  although  it  is  increasing,  is  as  yet  ap- 

'  In  Russia,  the  wheat  fanner  sells  his  wheat  and   buys  potaties  and  .liar  f-od- 
stuffs  relatively  inferior.     Cf.  L.  E.  Lyalschenko.  Agrarian  Evolution  in  ku.-.    m 
Russian:   St.  Petersburg.  .908),  vol.  i,  p.  401.     In  Saskatchewan  th:  wheat  f......r 

at  Brandon  sells  his  wheat  and  buys  poultry  and  eggs  brought  from  Ontario.  I  am 
informed,  however,  that,  owing  to  the  high  prices  prevailing  in  Ontario  for  these 
products  due  partly  no  doubt  to  the  extension  of  the  area  of  the  market,  the  farmers 
in  the  Northwest  are  turning  their  attention  to  the  economy  of  producing  them,  at 
least  in  quantities  sufficient  for  their  domestic  requirements. 


N...  4]  PRODI  CriOS  A.\n  MARKETISa  OF  WHF.A  T  67  I 

plied  in  Canada  to  a  comparatively  small  proportion  of  the  total 
area  devoted  to  wheat  production.     Meanwhile,  the  new  lands 
are  ceasing  to  be  new.  and  the  differential  advantage  which  their 
..nexhausted  fertility  gave  then»  is  diminishing.     Unds  which 
formerly  produced  abundant  crops  without  the  exercise  of  any 
considerable  farming  skill  or  the  employment  of  any  consider- 
able farming  capital  are  beginning  to  require  both.      The  r61e 
played  by  the  natural  resources  of  the  land  itself  is  becoming 
less  important  and  the  rdle  played  by  skill  and  capital  more  im- 
portant.    The  effect  of  these  changes  upon  the  value  of  land, 
as  well  as  upon  the  earnings  of  the  farmer  as  cultivator,  in  dis- 
tinction from  his  earnings  as  landowner,  must  be  studied  seri- 
ously in  the  immediate  future. 

In  the  preceding  discussion  the  economic  influence  of  climate 
has  not  been  taken  into  account.     This  matter,  indeed,  cannot 
be  considered  apart  from  the  question  of  skill  and  of  capital. 
At  times,  no  doubt,  climatic  cataclysms  may  involve  skilled  and 
unskilled,  poor  and  wealthy  farmers  in  co.nmon  ruin;  but  the 
normal  variations  of  climate  affect  these  classes  very  unequally. 
The  skilful  farmer  is  not  merely  weatherwise ;  he  knows  how  to 
adapt  his  system  of  cropping  to  the  exigencies  of  the  climate  of 
his  locality.     But  after  all  i-  said  that  may  be  said  upon  this 
topic,  there  remains  the  patent  fact  that  the  regions  01  equable 
climate  are  better  suited  to  competitive  farming  than  are  those 
regions  that  are  subject  to  great  and  severe  alterations  of  tem- 
perature and  of  moisture.     It  is  quite  true  that  wheat  and  other 
cereals  may  be  grown  in  very  high  latitudes,  but  it  is  not  true 
that  ir  these  latitudes  wheat  is  so  certain  a  crop  as  it  is  in  more 
southerly  regions.     If  it  is  assumed  that  the  demand  for  wheat 
will  constantly  increase,  the  area  devoted  to  wheat  production 
will  tend  to  increase,  up  to  the  limits  of  physical  availability  and 
possible  colonization.     These  limits  may  shift  from  time  to  time, 
but  they  are  insuperable.     Wheat  will  not  grow  everywhere  and 
men  will  not  live  everywhere.     As  the  price  of  wheat  rises,  the 
lands  which  have  gone  out  of  wheat  cultivation  owing  to  the  fall 
of  price  may  return  to  it ;  and  thus  it  may  reasonably  be  ex- 
pected that,  a.  some  point  in  the  price  scale,  the  lands  of  west- 
ern Europe  will  return  to  the  competitive  market  as  wheat  pro- 


67* 


mUTICAI.  MIENCE  QUAHTEkl.y 


.OL.  XXVI 


ducers  and  help  to  check  the  advance  of  price.  This  resump- 
tion of  wheat  growing  will  occur  first  on  the  lands  that  are  on 
the  margin  of  cultivation,  whether  by  reason  of  fertility  or  be- 
cause of  nearness  to  markets. 

Specialist  farming  of  wheat  involves,  among  other  economic 
incidents,   the   employment   during   harvest   of   a   number   of 
laborers  in  excess  of  those  needed  during    the  remainder  of 
the  year.     It  is  clear  that  such  temporary  labor  can  be  procured 
only  when  there  is  a  surplus  of  labor  in  the  neighborhood  or 
when  the  wages  offered  by  farmers  are  such  as  to  draw  laborers 
from  other  employments  or  from  a  distance.     If  laborers  are 
to  be  drawn  from  a  distant  center  of  supply,  the  wages  must 
include  the  cost  of  transportation ;  and  since  in  this  case  the 
labor  is  required  for  a  short  period  only,  and  since  as  a  rule 
employment  cannot  be  obtained  in  an  agricultural  district  after 
the  harvest  is  ove"-,  the  wages  must  also  include  the  cost  of  the 
laborer's  return  to  the  place  from    -hich  he  came.     Such  condi- 
tions have  for  many  years  produced  an  annual    migration  of 
Italian  field  laborers  from  Lombardy  and  Piedmont  to  southern 
France  and  of  North-Irish  laborers  to  the  southern  Scottish 
counties.     In   Canada  also,  during   recent  years,  regular  har- 
vesters' excursions  at  reduced  fares  have  been  organized  by  the 
railways,  bringing  laborers  even  from  the  Maritime  Provinces 
to    harvest   th*;    crop    in    the   Northwest.      Such    occurrences 
emphasize   the  obvious  fact  that  the  total  crop  of  wheat  that 
can  be  harvested  in  any  region  is  limited  by  the  number  of 
laborers  who  reside  in  the  region  or  who  can  be  temporur" 
drawn  to  it  for  the  period  of  harvesting.      The  increase  in  ti 
total  yield  mu.st  therefore  inevitably  depend  upon  an  increase 
of  population   within   the  farming   area,  or  upon  a  price  so 
high  that  the  farmers  can  afford  to  pay  very  high  wages  for 
assistance  drawn  from  other  areas. 

A  further  and  important  effect  of  specialist  wheat  production 
for  export  has  been  the  growth  of  small  towns  and  of  a  class  of 
small  merchants.  The  census  returns  both  of  the  United  States 
and  of  Canada  show  a  progressive  increase  in  the  proportion  of 
urban  to  rural  population.  This  is  a  tendency  neither  new  nor 
confined  to  wheat-producing  regions ;  but  specialist  wheat  pro- 


\ 


li- 
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he 

in    hifs 
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oi.ndin 


duclion  certainly  furthers  it.     Under  a  system  of  nat 

omy,  isolation  on  the  farm  or  in  the  agricultural  villii 

rule ;  under  the  system  in  which  production  of  a  sinj 

is  carried  on  for  sale  and  in  which  everything  cls< 

farmer  consumes  is  purchased  by  him,  the  rise  oi 

town,  parasitically  attached,  as  it  were,  to  the  afjricn 

trict.  is  an  economic  necessity.     Here  the  farmer  wli 

attention  to  general  production  gains  in  the  establi?<' 

local  market.     He  gains  also  in  variety  of  social  su 

and   his  children  enjoy  educational  advantages  \*'  ich  c-a, 

without  disproportionate  cost  be  obtained  in  spar  .-Iv  ^eitl'  i 

districts. 

The  practical  outcome  of  the  foregoing  con        rati« 
be  stated  as  follows:  The  specialist  wheat  farm      who  1  »- 

vating  new  land  must  consider  thai,  in  the  hij;lt!v  comi 
market  for  which  .c  is  producing,  his  rich  soil  gives  hii. 
time  a  certain  advantage,  but  that  this  advantage  is  not  pen*.^ 
nent.  and  that  he  should  insure  himself  against  fluctuati**  ^ 
prices  and  variation  of  climatic  conditions  by  setting  a  i>Of    on 
of  his  farming  profits  aside  as  a  reserve  fund.     There  is  special 
reason  for  so  doing  if  his  locality  is  one  in  which  climatic  varia- 
tions are  more  or  less  frequent.     The  specialist  wheat  fanner 
who  cultivates  in  a  high  latitude  or  in  a  dry  region  must  there- 
fore provide  for  the  continuance  of  his  productive  capacity  by 
the  creation  of  a  strong  insurance  fund  out  of  the  yield  of  favor- 
able years.     The  increase  of  the  local  valuation  of  his  land  does 
not  constitute  such  a  fund ;  for  this  increase  is  uncertain  of  re- 
alization, and  it  depends  upon  the  non-occurrence  of  the  very 
co;  -ngcncies  against  which  it  is  necessary  tor  him  to  secure 
himself.     The  form  which  this  insurance  should  take  may  well 
be  subject  to  variation,  but  it  is  not  impossible  that  the  farmer 
may  find  it  to  his  advantage  to  give  it  an  agricultural  form  by 
introducing  some  modification  of  his  specialist  production. 

Some  sort  of  insurance  against  falling  prices  is  no  less  neces- 
sary than  insurance  against  an  unfavorable  season.  The  special- 
ist farmer  is  so  entirely  dependent  upon  the  price  of  his  pro- 
duct in  the  universal  market  that  whatever  affects  that  price 


674 


POLITICAL  SCIENCE  QUAKT EHtV  [Vol.  XXVI 


aflccu  him ;  and  yet  he  has  no  more  control  of  the  market  than 
of  the  weather. 

Ill 

Part  of  the  price  which  the  farmer  has  to  pay  for  the  huge 
commercial  mechanism  'vhich  has  brought  the  elevator  to  his  im- 
mediate reigh'    rhood.  and  which  brings  the  cash  for  his  wheat 
into  his  pocket  the  moment  his  crop  is  reaped,  is  a  certain  sac- 
rifice of  his  independence.     Formally,  with  his  farm  home- 
steaded  and  paid  for,  or  purchased  upon  fixed  terms  of  pay- 
ment, he  is  the  proprietor  of  his  land  iti  fee  simple  and  is  there- 
fore in  a  sense  independent,  but  he  is  nevertheless  dependent 
upon  the  very  mechanism  which  serves  him.    The  price  of  wheat 
at  Liverpool  or  at  Cliicago  is  «>f  more  interest  to  him  than  an\- 
thing  else.     The  quantity  of  his  crop  and  his  yield  per  acre  are 
of  less  importance ;   for  in  a  year  of  abundant  harvests  and  low 
prices  he  may  have  a  small  return,  and  in  a  year  of  scarcity  and 
high  prices  he  may  have  a  large  return.     His  fortunes  th   ^  de- 
pend by  no  means  exclusively  either  upon  the  natural  resources 
of  his  land  or  upon  his  own  skill  or  industrj-,  alth')ugh  of  course 
they  depend  in   some   measure  upon  all  of  these.     The  only 
method  by  which,  within  the  limits  of  his  business  as  a  farmer, 
he  can  diminish  his  dependence  upon  the  external  conditions 
that  affect  his  market,  is  to  produce  for  more  than  one  market, 
that  is,  to  have  more  crops  than  one.     At  all  events,  he  can  to 
a  large   extent   insure   himself  against  a  disastrous   year  by 
producing  all  the  supplies  required  for  the    maintenance  of 
his  family  that  can  be  produced  on  a  farm.      In  favorable 
seasons  it  may  appear  to  be  an  economical  policy  to  sell  every- 
thing he  produces  and  to  buy  everything  he  needs,  but  in  the 
long  run  he  may  find  that  this  policy  may  be  pushed  too  far, 
and  that  in  committing  himself  completely  to  the  tender  mercies 
of  the  wheat  market  he  has  compromised  his  economic  position 
and  has  imperiled  the  continuance  of  h  -.  production. 

In  spite  of  mutual  dependence,  a  struggle  between  industrial 
and  commercial  capital  on  the  one  side  and  agricultural  capital 
on  the  other  must  always  be  going  on  in  a  more  or  less  acute  form 
under  the  conditions  of     ,"»ecialist  production.     In  the  United 


No.  4) 


PMODVCTION  AND  MARKhriSC  OF  WHEAT 


675 


States  and  in  the  Northwest  of  Canada  this  antagoniHrn  has  man- 
ifested itself  in  the  Grang  '1  FopuHst  movements  and  in  hos- 
tility to  the  railways  an'*  *'  .  elevator  companies.  The  farmer 
has  had  enough  poli;  ,'Ower  to  secure  legislative  aid,  and  in 
Canada  the  Grain  Acts  "re  passed,  compelling  the  railway  com- 
panies to  send  to  any  railway  siding  for  the  use  of  a  farmer  a 
car  for  loading  grain.  Much  objection  was  expressed  by  the 
railway  companies  to  this  legislation;  and  in  certain  years, 
when  cars  were  in  demand,  it  has  increased  the  difficulty  of  con- 
veying the  crop  to  the  lake  ports  before  the  close  of  navigation. 
The  farmer  looks  upon  the  railway  company  and  the  elevator 
company  as  his  natural  enemies,  and  there  is  undoubtedly  fun- 
damental cause  for  the  striggle  between  them.  This  struggle 
is  determined  in  its  intensity  by  the  presence  or  absence  of  ob- 
vious competition  in  transportation  and  in  marketing ;  but  the 
antagonism  is  rendered  inevitable  by  the  dependence  of  the 
specialist  producer  upon  the  agencies  that  carry  his  produce  to 
market.  He  is  inevitably  dependent  upon  the  series  of  middle- 
men who  stand  and  must  stand  between  him  and  the  European 
consumer.  The  production  of  wheat  for  export,  which  forms 
an  increasing  proportion  of  the  total  production,  and  the  com- 
mercialization of  the  entire  process  are  at  once  the  source  of 
the  farmer's  profit  and  the  cause  of  an  economic  dependence 
from  which  no  legislation  can  fully  free  him.  So  long  as  the 
production  of  wheat  was  only  slightly  in  excess  of  the  require- 
ments of  the  local  mills,  and  even  during  the  periods  when  this 
production  was  only  -lightly  in  excess  of  the  requirements  of 
Canada  for  domestic  consumption,  the  competition  of  the  local 
mills  and  of  the  agencies  of  export  was  sufficient  to  secure  the 
farmer  against  exploitation  by  one  or  the  other.  This  security, 
however,  did  not  necessarily  involve  greater  profits  to  the 
farmer ;  on  the  contrary,  his  periods  of  large  profits  have  un- 
doubtedly been  concurrent  with  the  diminishing  importance  of 
his  local  market  and  the  increasing  requirements  of  the  export 

market. 

James  Mayor. 

Univbrsiiy  or  ToiONnc. 


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